Economic Planning In India – Five Year Plans
The term economic planning is used to describe the long term plans of the government of India to develop and coordinate the economy with efficient utilization of resources. Economic planning in India started after independence in the year 1950 when it was deemed necessary for economic growth and development of the nation.
List of Five Year Plans in India-Download PDF Here
Long term objectives of Five Year Plans in India are:
The idea of economic planning for five years was taken from the Soviet Union under the socialist influence of first Prime Minister Pt. Jawahar Lal Nehru.
The first eight five year plans in India emphasised on growing the public sector with huge investments in heavy and basic industries, but since the launch of Ninth five year plan in 1997, attention has shifted towards making government a growth facilitator.
An overview of all Five Year Plans implemented in India is highlighted below:
| List of Five Year Plans in India [1951-2017] | |||
| Five Year Plans | Years | Assessment | Objective |
| First Five year Plan | 1951- 1956 | Targets and objectives more or less achieved. With an active role of the state in all economic sectors. Five Indian Institutes of Technology (IITs) were started as major technical institutions. | Rehabilitation of refugees, rapid agricultural development to achieve food self-sufficiency in the shortest possible time and control of inflation. |
| Second Five year Plan | 1956-1961 | It could not be implemented fully due to the shortage of foreign exchange. Targets had to be pruned. Yet, Hydroelectric power projects and five steel mills at Bhilai, Durgapur, and Rourkela were established. | The Nehru-Mahalanobis model was adopted.‘Rapid industrialisation with particular emphasis on the development of basic and heavy industries Industrial Policy of 1956 accepted the establishment of a socialistic pattern of society as the goal of economic policy. |
| Third Five year Plan | 1961-1966 | Failure. Wars and droughts. Yet, Panchayat elections were started.• State electricity boards and state secondary education boards were formed. | ‘establishment of a self-reliant and self-generating economy’ |
| Plan Holidays – Annual Plans | 1966-1969 | A new agricultural strategy was implemented. It involved the distribution of high-yielding varieties of seeds, extensive use of fertilizers, exploitation of irrigation potential and soil conservation measures. | crisis in agriculture and serious food shortage required attention |
| Fourth Five year Plan | 1969-1974 | Was ambitious. Failure. Achieved growth of 3.5 percent but was marred by Inflation. The Indira Gandhi government nationalized 14 major Indian banks and the Green Revolution in India advanced agriculture. | ‘growth with stability’ and progressive achievement of self-reliance Garibi HataoTarget: 5.5 pc |
| Fifth Five year Plan | 1974-1979 | High inflation. Was terminated by the Janta govt. Yet, the Indian national highway system was introduced for the first time. | ‘removal of poverty and attainment of self-reliance’ |
| Sixth Five year Plan | 1980-1985 | Most targets achieved. Growth: 5.5 pc.Family planning was also expanded in order to prevent overpopulation. | ‘direct attack on the problem of poverty by creating conditions of an expanding economy’ |
| Seventh Five year Plan | 1985-1990 | With a growth rate of 6 pc, this plan was proved successful in spite of severe drought conditions for the first three years consecutively. This plan introduced programs like Jawahar Rozgar Yojana. | Emphasis on policies and programs that would accelerate the growth in foodgrains production, increase employment opportunities and raise productivity |
| Annual Plans | 1989-1991 | It was the beginning of privatization and liberalization in India. | No plan due to political uncertainties |
| Eighth Five year Plan | 1992-1997 | Partly success. An average annual growth rate of 6.78% against the target 5.6% was achieved. | Rapid economic growth, high growth of agriculture and allied sector, and the manufacturing sector, growth in exports and imports, improvement in trade and current account deficit. to undertake an annual average growth of 5.6% |
| Ninth Five year Plan | 1997-2002 | It achieved a GDP growth rate of 5.4%, lower than the target. Yet, industrial growth was 4.5% which was higher than targeted 3%. The service industry had a growth rate of 7.8%. An average annual growth rate of 6.7% was reached. | Quality of life, generation of productive employment, regional balance and self-reliance.Growth with social justice and equality. growth target 6.5% |
| Tenth Five year Plan | 2002 –2007 | It was successful in reducing the poverty ratio by 5%, increasing forest cover to 25%, increasing literacy rates to 75 % and the economic growth of the country over 8%. | To achieve 8% GDP growth rate,Reduce poverty by 5 points and increase the literacy rate in the country. |
| Eleventh Five year Plan | 2007-2012 | India has recorded an average annual economic growth rate of 8%, farm sector grew at an average rate of 3.7% as against 4% targeted. The industry grew with an annual average growth of 7.2% against 10% targeted. | Rapid and inclusive growth.Empowerment through education and skill development. Reduction of gender inequality.Environmental sustainability.
To increase the growth rate in agriculture, industry, and services to 4%,10% and 9% resp. Provide clean drinking water for all by 2009. |
| Twelfth Five year Plan | 2012-2017 | Its growth rate target was 8%. | “faster, sustainable and more inclusive growth”. Raising agriculture output to 4 percent. Manufacturing sector growth to 10 %
The target of adding over 88,000 MW of power generation capacity. |
The following were the original objectives of economic planning in India:
Economic planning in India dates back to pre-Independence period when leaders of the freedom movement and prominent industrialists and academics got together to discuss the future of India after Independence which was soon to come. Noted civil engineer and administrator M. Visvesvaraya is regarded as a pioneer of economic planning in India. His book “Planned Economy for India” published in 1934 suggested a ten year plan, with an outlay of Rs. 1000 crore and a planned increase of 600% in industrial output per annum based on economic conditions of the time.
The Industrial Policy Statement published just after independence in 1948 recommended setting up of a Planning Commission and following a mixed economic model. Here are the major milestones related to economic planning in India:
Setting up the NITI Aayog was a major step away from the command economy structure adopted by India till 1991. The Planning Commission’s top down model of development had become redundant due to present economic conditions and NITI Aayog approaches economic planning in a consultative manner with input from various state governments and think tanks.